Libbey posts $10M loss as sales in 2 regions slide

Sales decreased 2.2 percent to $209.2 million

7/27/2012

BLADE STAFF

Toledo's Libbey Inc. reported Thursday that it had a second-quarter loss of $10.1 million, or 49 cents a share, as sales in its Mexico and European regions declined. Overall, Libbey reported that its sales decreased 2.2 percent to $209.2 million in the quarter. That compared with $214 million for the same period in 2011.

Toledo's Libbey Inc. reported Thursday that it had a second-quarter loss of $10.1 million, or 49 cents a share, as sales in its Mexico and European regions declined.

But one analyst said that, despite the loss, the tableware maker had a pretty solid quarter and appears to be well positioned for growth.

Overall, Libbey reported that its sales decreased 2.2 percent to $209.2 million in the quarter. That compared with $214 million for the same period in 2011.

A year ago, the company posted a second-quarter profit of $15.4 million, or 74 cents a share.

But Stephanie Streeter, the company's chief executive officer, said that in the most recent quarter, company sales in the Mexico region dipped 12.9 percent and those in Europe fell 16 percent.

On the bright side, Libbey's sales in China grew 24.2 percent, and sales rose 5.9 percent in the U.S. and Canada regions.

However, the company was hurt additionally by a special $31 million loss incurred by the redemption of debt in conjunction with a new senior note offering completed in the second quarter.

Arnold Ursaner, an analyst who is president of CJS Securities Inc., in White Plains, N.Y., said the debt-redemption move was an important one that helps Libbey lower its risk.

"Once you 'X' that [$31 million] out, the performance of the quarter was excellent," Mr. Ursaner said. "The biggest positive surprise, the reason they had such strong results, was their gross margin was among the highest numbers we've seen from them in a decade."

The company's stock rose 69 cents Thursday to close at $14.70 on the New York Stock Exchange.

Trading of Libbey shares was heavy, with the volume totaling 193,097 shares. Average daily volume for Libbey shares is 77,000.

"We are encouraged by these results, driven by our efforts to increase productivity and control costs as well as the solid sales growth we achieved in select markets," Ms. Streeter said in a statement. "Our sales were particularly strong in glass operations in the U.S. and Canada and in China. On the other hand, sales were disappointing in Mexico and Europe.

"Despite this reasonably strong quarter, we have a lot of work to do to sustain performance and secure our future," the CEO said.

"The strategic plan we announced earlier this month will strengthen and build upon the effort to improve our cost structure, leverage our advantaged businesses, and strengthen our balance sheet," she added.

On July 18, the company announced it was changing its business strategy to one based on regional leadership instead of global leadership.

In the process, Libbey cut 5 percent of its global managerial, professional, and administrative work force.

Mr. Ursaner praised Libbey's new strategies.

"I think the actions they're taking positions the company to show strong profitability growth in the next several years through lean initiatives, better manufacturing processes, and more focused growth in China," he said.

-- Jon Chavez

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